Gemini, Winklevoss Twins’ Exchange, Faces Lawsuit from Lender Genesis

A court filing submitted Tuesday has revealed that bankrupt crypto lender Genesis Global Capital is suing its former business partner, the cryptocurrency exchange Gemini, in an attempt to recover US$689 million. 

Genesis’ filing alleges that Gemini—which is owned by the Winklevoss twins—made preferential transfers of an “aggregate gross amount of no less than approximately $689,302,000” from Genesis. It’s a move the lender claims harmed its other creditors, and it’s asking the court to “correct this unfairness.” 

Gemini and Genesis Relationship Status: It’s Complicated

Originally Gemini and Genesis were business partners, but their relationship soured in the wake of FTX’s collapse and the subsequent bank run on many crypto exchanges and lenders, which eventually saw Genesis file for bankruptcy in January of this year.

Following Genesis’ bankruptcy, Gemini sued the lender’s parent company Digital Currency Group (DCG) in July, alleging fraud in relation to funds held by Genesis for Gemini’s ‘Earn’ program.

In September, Genesis also sued DCG—yes, its own parent company—over what it claims are unpaid loans valued at over US$ 600 million (AU$ 914 million), alleging that DCG and Digital Currency Group International (another DCG subsidiary) were wrongfully in possession of property belonging to Genesis’ bankruptcy estate.

To complicate matters further Gemini, Genesis and DCG are also currently fighting a lawsuit filed against all three of them by the New York Attorney General in which they’re alleged to have lied to investors about the risks associated with Gemini’s ‘Earn’ program.

Gemini Transfers Contributed To Bankruptcy, Alleges Genesis

Genesis’ court filing claims that in the midst of the market turmoil triggered by the collapse of Terraform Labs, Gemini made “unprecedented withdrawals” from the lender, fuelling fear among other creditors and sparking a bank-run. 

The filing also claims during a 90-day period, known as the preference period, Gemini demanded the repayment of loans it had previously made to Genesis—transfers that Genesis claims were “avoidable” and were based on Gemini’s belief that the lender was insolvent.